Curing the Turnover Disease

A troubled merger--in a mature industry--leads to a culture clash. Crucial employees defect, en masse, to the competition. Costs soar at the merged company, as recruiting replacement workers proves time-consuming. The company’s reputation for service slips.

Sound familiar?

Beth Israel Deaconess Medical Center, created in the late 1990s by the merger of Beth Israel, a Harvard Medical School training hospital, and Deaconess, a community hospital in Boston, made many of the management mistakes seen in other industries after mergers. Now, a holistic approach to personnel management is helping Beth Israel Deaconess reach its nurse recruiting and retention goals after several troubled years.

Frustration and turnover The hospital faced a 14 percent vacancy rate for nurses last year--nearly double the national average. Unable to cope with the crisis effectively at the 526-bed hospital, senior management hired a new vice president of patient care services, Dianne Anderson, who had a reputation for helping turn around troubled nursing staffs.

"Our medical center had gone through a very difficult period after a merger about seven years ago," says Anderson. "There was a serious financial situation, and several challenging years, which led to the increased turnover of nurses and physicians."

Anderson convinced senior management, including CEO Paul Levy, to hold a series of "town hall meetings" with the nursing staff, to hear why so many nurses were so frustrated with their jobs there. Consider it a 360-degree performance review--in public. Management heard--quite clearly--that it wasn’t listening to the new workforce. This was quite a challenge for them.

"They started off with a lot of hostility, a lot of anger and emotions," says Anderson. "And it ended up being very, very positive."

Those who had worked for Deaconess felt that the merger wasn’t really a deal between equals but was "rather an acquisition," says Ira Wolfe, a recruiting and retention consultant who has worked with one of the hospital's departments. Many Deaconess employees felt that they were treated as inferior by the Beth Israel staff because they worked for a hospital that would no longer exist because of financial difficulties.

Executives also learned that nurses felt mistreated by the physicians at the hospital, many of whom were perceived as being haughty Harvard graduates who couldn’t care less what the nurses’ opinions were about patient care. Many of the nurses felt stuck in dead-end jobs, with few prospects for career growth or personal enrichment.

And, oh yes, the pay was not competitive with what was being offered at the other hospitals in town.

Jobs, careers and pay The solutions emerged slowly but have proved to be effective for the hospital. Anderson says that the vacancy rate for nurses has dropped to below the national average.

Beth Israel Deaconess redesigned the nurses’ jobs as a first step in the retention effort. Gradually, nurses were allowed more autonomy and decision-making authority in areas in which they were expert.

Senior management instructed doctors to treat nurses as valuable team members in patient care, not lackeys who were there to conduct menial tasks. "The main reason that people go into nursing is to help people," says Wolfe, who is also a director of a hospital in Lancaster County, Pennsylvania. "If they feel like they’re not helping people, they feel as if they have no purpose in life there, and they leave."

Nurses’ potential paths up the career ladder became clearer. Registered nurses with two years of college were given help with tuition to complete their bachelor of science in nursing degree. Those who had their BSNs were given help in completing a master’s degree in a higher-paying specialty.

Pay was raised. Flexible hours were introduced, allowing employees to work on schedules that better fit their lives. Employees who lived a long distance away--such as in New Hampshire or New York--were given a housing allowance to enable them to maintain a local apartment while they were working a few days a week in Boston.

"This is all part of our new practice model, which we call the Premiere Practice model," says Anderson. "That includes a positive work environment, professional involvement in decision-making, maintaining a primary nursing focus and shared governance--ways that the staff are involved in making decisions on their work and a variety of other things."

200 nurses = $1 million To reinforce the changes, the hospital launched an advertising campaign on TV and radio and in print to extol the working environment at Beth Israel Deaconess. The ads featured nurses talking about how great their jobs were.

"We’ve made a very serious effort, and deliberate, to make this the best hospital for nurses to work in Boston," says Anderson. "We made a market adjustment to make sure we were competitive with salary. But it’s not all about that. It’s about the workplace environment and aspects of the work situation."

These tactics were undergirded by an aggressive recruiting strategy. The hospital wanted to recruit 200 new nurses in one year, starting in early 2002.

"When we started off, our vacancy rate was something like 14 percent," says Anderson. "And it is now down to 6 percent. The same thing for our turnover rate, which is now down to 6 percent, which was also at 14 percent." The medical center employs close to 1,000 nurses overall.

Senior management continues to listen to employee concerns through "management councils," which are made up of senior nurses and department heads. They handle issues of professional practice, career development, research, quality of care and the like.

As a result of these management councils, some new lessons have emerged since the initial town hall meetings, feedback that has reached the executive suite. Many departments of the hospital, for example, found that nurses lacked the proper supplies to do their jobs effectively, like syringes or bandages. Increasing the on-site supply of these materials increased job satisfaction for workers.

How much has this saved the hospital? Wolfe estimates that it costs upwards of $35,000 to replace a nurse who leaves, according to one study of nurse employment-transition costs. With around 200 nurses leaving the hospital, and being replaced, each year, the cost to Beth Israel was close to $1 million annually.

They’re not alone Hospital employers around the country face many of these same challenges. A study by the American Journal of Nursing, the nation’s oldest and largest nursing magazine, exposed the impact of "disruptive physician behavior" on the morale of nurses and on their job satisfaction.

Hospitals are trying to address these problems, and exploringnumerous other strategies, like recruiting more males, something the U.S. Army Nurse Corps has had success at.

The U.S. Department of Health and Human Services is trying to do its part, giving grants to college nursing programs to encourage them to recruit and graduate nursing students "from under-represented backgrounds," says Kelly Adams, a spokeswoman for Utica College, one of the recipients of the federal largess.

Meanwhile, large health-care providers like New York-Presbyterian Healthcare System have hired outside firms like Watson Wyatt to get help in attracting nurses and keeping them on board.

Another large health-care system, the Geisinger Health System, which serves 2.5 million patients in rural Pennsylvania, is working with the Pennsylvania State University School of Nursing to help 40 hospital employees "earn their nursing degrees without leaving their present jobs," says Mike Ferlazzo, a spokesman for Geisinger. Ferlazzo says that enrollees include LPNs, clerks, secretaries and other employees of Geisinger and local community hospitals. The students are receiving tuition reimbursement, loans and other financial aid from their respective hospitals.

It has helped that the economy has been weak. The University of Phoenix, an accredited online school, now offers a nursing program. A spokeswoman, Charlotte Tomic, says, "More and more people are going into nursing in this economy."